MUMBAI: The Indian rupee edged slightly lower on Monday, tracking mild weakness in its Asian peers and likely facing pressure from a jump in oil prices, amid concerns over potential supply disruptions in the Middle East.

The rupee was at 83.1450 as of 10:00 a.m. IST, compared with its previous closing at 83.1150.

The dollar index was largely steady near 103.5, while most Asian currencies logged marginal declines.

Brent crude oil futures were last quoted up 0.6% per barrel to the highest in nearly two months, following a rise of over 6% last week, as Houthi rebels stepped up attacks on vessels in the Red Sea.

Potential portfolio outflows and higher crude oil prices “could definitely push the rupee lower,” said Dilip Parmar, a foreign exchange research analyst at HDFC Securities.

Foreign investors have net sold Indian equities worth nearly $3 billion in January so far, exceeding the $2.06 billion of debt-related inflows in the month.

Indian rupee little changed tracking mostly subdued Asian peers

Meanwhile, U.S. inflation data released on Friday showed that the personal consumption expenditures (PCE) price index increased 0.2% last month, along expected lines, while the annual inflation rate was under 3% for the third straight month.

Investors will closely monitor two events this week – the outcome of the U.S. Federal Reserve meeting and the presentation of India’s Federal Budget.

While the Fed is widely expected to keep rates unchanged this week, Chair Jerome Powell’s comments may offer cues on the potential timing of future rate cuts.

Investors are nearly evenly divided on whether the Fed will begin easing rates at its March meeting, according to CME’s FedWatch tool.

“Expecting a broadly quiet market heading into the Fed meeting … but any dovish tone from Fed could open up some room for rupee appreciation,” a foreign exchange trader at a private bank said.